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Roula Khalaf, editor-in-chief of the FT, selects her favourite stories in this weekly newsletter.
Twice in the past half century, in the transitions to Margaret Thatcher’s Conservatives in 1979 and to Tony Blair’s New Labour in 1997, elections have brought about a major change in British politics. Today, the country is on the cusp of another major shift. Voters seem to have decided that, after an often turbulent 14 years in office, spread over five prime ministers, the time of the Conservative Party is over. Surely there can be no other conclusion.
No party in power for so long can escape a reckoning, and no government since at least 1979 has left the nation’s affairs in such a desperate state. Economic growth and real wages since 2010 have lagged far behind their historic trend since the war. The tax burden is approaching a post-1945 record, and the national debt is the highest relative to output in 60 years. Yet public services are in disrepair. Britain’s defences are exhausted.
The Conservatives can point to external shocks: the aftermath of the financial crisis and the Great Recession; a global pandemic and Vladimir Putin’s invasion of Ukraine. However, much of the damage was self-inflicted. Long-term cuts weakened the public domain. Liz Truss, as Prime Minister, carelessly caused a market crisis in 2022. Brexit, the defining project of this Tory era, has proven to be an act of serious economic self-harm.
During the feverish EU withdrawal process, Boris Johnson’s government played loose with the rule of law, undermining public respect for politics and institutions. Britain’s position was undermined in the eyes of its allies. Rishi Sunak has taken steps to right the ship of state; Jeremy Hunt has been a serious chancellor. But even now the Prime Minister does not seem to be in charge of a party mired in bickering and slime. All too often since 2010, the Conservative Party has prioritized the management of its divided party politics over the sound governance of Britain.
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The Financial Times has no fixed party political allegiance. We believe in liberal democracy, free trade and private enterprise, and an open, outward-looking Britain. This has often brought us more in line with the British Conservatives. But this generation of Tories has squandered its reputation as the party of business and its claim to be the natural party of government. The party needs a period of opposition to resolve its internal differences. However, we would not like to see the Conservatives so shattered that they are unable to fulfill the role of viable opposition that is vital to British politics.
Sir Keir Starmer’s Labour Party is better placed today to provide the leadership the country needs. Five years ago, under the far-left Jeremy Corbyn, this idea would have seemed fanciful. Starmer has transformed a ragtag group, hungry for the failed interventionism of the 1970s, into a credible governing party. Both the Conservatives and Labour, infected by various forms of populism, abandoned the centre ground in 2019. It is Labour that has returned there.
The FT still worries about Labour’s interventionist instincts and zeal for regulation. Its historical sympathies with the unions need to be balanced with the interests of business and the public. Its understandable eagerness to distance itself from Corbynism and its tax-and-spend past has forced it to be overly cautious. As with the Conservatives, its unrealistic fiscal assumptions will make it hard to fund and invest in a broken NHS and other public services. On many domestic issues, Labour’s responses fall short. Its manifesto too often tinkers around the edges.
While the challenges specific to Britain are exceptionally difficult, a new government will also come to power at a time of great upheaval, with the post-war international order in distress. It will have to tackle the same missions as other leading economies: fighting climate change and mastering artificial intelligence, and dealing with a rising China, a revisionist Russia and possibly a second Trump presidency in the US.
Yet Labour has positive ideas, and Starmer and his shadow chancellor have worked hard to engage with business and the City of London and regain their trust. A less ideological approach to government is welcome. The party has rightly made revitalising growth central to its programme. The stability, predictability and competence it promises have been lacking in British governance for years. They are essential ingredients for attracting investment.
Promises to reform the planning system and devolve more powers to the regions target major constraints on growth and the ability to build the homes and infrastructure the economy needs. The commitment to combating climate change and investing in the opportunities of green energy stands in stark contrast to the Conservatives’ efforts to turn the green transition into a wedge issue.
The biggest danger is that Labour’s growth strategy will prove inadequate – and regrettably, its reluctance to talk about rebuilding trade relations with the EU closes off another window of opportunity to boost the economy. It may soon have to choose between deep cuts to public spending, changing the tax rules or pulling the tax lever; the Institute for Fiscal Studies warns that pledges to increase real spending on health, schools and defence would mean cutting other public services by £9bn a year by 2028. Despite calling itself the party of wealth creation, a Labour government could well be targeting wealth creators.
But few political options are ever ideal. Britain must choose between a polarizing Conservative Party that has limited its appeal to a shrinking section of the population and a Labour Party that seems intent on governing the entire country. The risks of holding on to the exhausted incumbent outweigh those of installing a new government. Much of the country is hungry for a fresh start. Labour should have the chance to provide that.